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GM Follows Tesla's Lead, Plans To Sell Directly To Online Shoppers

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October 7, 2013

Tesla has made plenty of headlines the past couple of years -- not just because its Model S sedan is selling better than critics expected (despite the occasional fire), but also because of its unusual sales strategy. According to the Wall Street Journal, General Motors plans to follow Tesla's lead on that front.

If you've not been following along, you may not be familiar with Tesla's sales process, which depends largely on the company's website and a network of real-world "galleries". That strategy evolved in response to state franchise laws, which typically prevent automakers -- even start-ups like Tesla -- from selling directly to consumers. As a result, Tesla shows off its vehicles in galleries, but to complete sales, it refers customers to the Tesla website.

Dealers' associations haven't been happy with Tesla's plan. In every state where Tesla has tried to open a gallery, dealers have fought back, arguing that Tesla galleries may not be conducting sales per se, but they're doing everything shy of that. They insist that Tesla is involved in a game of semantics, and they've made their case in court -- though for the most part, they've lost.

Perhaps emboldened by Tesla's success, GM has announced plans to expand the functionality of Shop-Click-Drive, a web application that it uses on the Buick, Cadillac, Chevrolet, and GMC websites. Shop-Click-Drive allows website visitors to do almost everything they'd do in a showroom: customize rides, get trade-in estimates for their current car, secure pricing and financing for a new GM vehicle, and even arrange for delivery.

So, what's the difference? Shop-Click-Drive is connected to GM's sprawling network of 4,300 dealers. When someone orders a new vehicle using Shop-Click-Drive, it may appear as if they're dealing directly with GM, but in fact, everything's running through local dealers. Test drives, trade-ins, financing: when GM customers want a new vehicle, they still have to visit their local dealer to sign on the dotted line.

Though GM is not requiring dealers to participate in the program, many see it as an important means of reaching web-savvy Millennials and others who prefer the convenience of shopping online.

OUR TAKE

Shop-Click-Drive raises many important questions:

Who earns the commission on web sales?

Isn't this really about GM selling directly to customers, using dealerships as glorified distribution centers?

Will dealers' networks grumble about Shop-Click-Drive as loudly as they've grumbled about Tesla?